- Personal Finance
How to Get Over Bad Credit
Bad credit is something a great many people have struggled with. Lateness in paying bills and piling up debt beyond one's ability to pay are the typical causes. People who get into financial trouble can then fall victim to unscrupulous debt consolidators and for-profit credit repair businesses who charge you money and wind up only making you worse off. Here are some ways to get over having bad credit once and for all.
Determine Your Main Need for Credit
Think about why you might need good credit. The main reason is to buy things that you can't afford to pay for all at once. The largest purchase most of us will ever make is a house. Getting a mortgage for a house is an important goal and you should use it to motivate you to gradually repair your bad credit history. You repair your bad credit by always paying your bills on time and paying off your debts. That is easier said than done if you are in financial trouble. In the meantime, pay down your debt balances across the board to get below 30% of your credit limit. Then work to pay off the remaining credit balances and keep them paid off monthly.
Decide Not to Buy Anything Else on Credit
Think about what else you need to buy on credit besides a house. The answer is probably nothing. You may WANT to buy other things on credit, like a car, big screen TV, new computer, a cruise, etc. But you don't NEED to. You have alternatives like saving up for the things you want, using lay-away plans, and buying cars costing only a few thousand dollars for cash.
Get Over Bad Credit by Getting Out of Debt
One key to getting over bad credit is to not use credit except for a mortgage. The most helpful strategy to repair your credit so that you won't have to pay too high an interest rate for a mortgage is to get out of all other debt first, and to never again buy goods or services on credit. You will be much better off psychologically and financially with no debt and living well within your means.
Develop an Attitude of Control and the Habit of Self-Denial
Change your outlook on credit and your life should improve dramatically. Keep repeating to yourself: "I am in control of my destiny." You are if you can eliminate impulse purchases that require you to finance them. Develop the habit of always paying cash. Proudly tell yourself and other family members when temptation arises that this is something you/we cannot afford at the moment. You are proud about it because you are in control financially and will never let yourself get out of control again.
Recall That the Pleasure of Things Bought in the Past is Fleeting
Think about why you and others have bought things in the past that you couldn't really afford and perhaps didn't really need. It's almost always because it makes you "feel good" in the short term. But the price of those short term self-gratifying "feel-goods" is too high to bear over time - like bad credit, high debt and financial trouble. To feel in control, to actually be in control, is much better, isn't it?
Take Responsibility for Your Bad Credit and Fix It
Accept responsibility for your bad credit and any debts you may have. Don't blame others for your poor decisions. Just correct the mistakes of the past, aim to get debt free and have no need for credit other than a first mortgage.
If You Are Deeply in Debt
Taking the steps outlined above will not only repair bad credit, it will eventually eliminate the need for credit cards and installment purchases in your life.
If you are deeply in debt, consider selling everything you can to raise money to get out of debt. Selling your house and starting over debt free may be an alternative, but consider such drastic measures very carefully!
If you are in serious financial trouble seek professional help. Get references to avoid the unscrupulous operators out there who prey on people who are in financial trouble.